Asian equities slide as oil spikes and AI spending doubts hit tech
Asian markets fell sharply on Friday as a convergence of surging oil prices, renewed tariff threats, and doubts over artificial intelligence returns triggered a broad sell-off in technology and semiconductor stocks.
Asian equity markets declined on Friday, tracking a severe Wall Street sell-off from the previous session. Investors are retreating from risk assets as a combination of geopolitical escalation, rising energy costs, and skepticism over massive technology capital expenditure converges into a single market threat.
Technology shares absorbed the heaviest losses following a brutal Thursday for US mega-caps. Alphabet dropped nearly 7 per cent while Tesla plunged more than 14 per cent amid scrutiny of their massive capital spending drives. The Magnificent Seven index shed almost US$800 billion in market value, marking its largest single-day drop since the tariff-driven selloff in April 2025.
Concerns are mounting over when colossal investments in artificial intelligence hardware and research will generate returns. Meta, Microsoft, and Amazon have already committed to spending more than US$700 billion on AI ambitions this year ahead of next week's earnings reports. As Angelina Lai at St. James's Place Asia and Middle East wrote, "future outcomes are likely to depend less on exposure to a theme and more on which businesses can translate investment into sustainable earnings growth."
The heavy Wall Street selling bled directly into Asian technology and semiconductor supply chains. Seoul’s market dropped more than 3 per cent, with Samsung and SK Hynix each losing over 7 per cent. In Tokyo, the Nikkei index fell sharply as Kioxia tumbled almost 10 per cent, while Advantest and Tokyo Electron declined by more than 5 per cent and nearly 7 per cent respectively.
The technology rout is compounded by a resurgent Middle East conflict that has pushed energy costs back above critical thresholds. Fresh tit-for-tat attacks between the US and Iran, combined with Houthi rebels joining the fight and striking Saudi shipping in the Red Sea, sent Brent crude soaring 7 per cent on Thursday. The commodity hovered just above US$100 on Friday as the disruption threatens to block a major oil export channel.
This energy spike reignites fears that central banks will be forced to hike interest rates to combat renewed inflation. Stephen Innes at SPI Asset Management stated that "oil, rates and AI had fused into a modern market Chimera." He noted that what had looked like three separate threats was now moving as one beast, with crude feeding the inflation inferno.
Washington also announced new import tolls ranging from 10 per cent to 12.5 per cent across 60 trading partners, including China and India, over forced labour concerns. The administration is rapidly rebuilding Donald Trump's tariff wall after the Supreme Court struck down previous duties in February. A temporary 10 per cent import tariff, which was limited to 150 days, is set to expire on Friday.
Broader regional indices in Hong Kong, Shanghai, Sydney, Singapore, Taipei, and Manila also posted significant declines. United Nations Secretary-General Antonio Guterres warned that the "situation is getting out of control" and is "teetering on the edge of the unimaginable."
